Apple eBook price fixing case going to court

[fjtorres]

Originally Posted by kennyc

Besides, as I've already said, the case and result was clear from the beginning, sure something could have changed it, but in this case we all knew the outcome (even Apple) other than the fanboys.

Here's some legal commentary on the decision:

http://beldar.blogs.com/beldarblog/2...racy-case.html

Read.
Bookmark.
Wait for the appeal to come back stamped: Concur.

But do remember this: Don't even try to bad mouth Cote. It won't work.

In footnote 66 on p. 143, Judge Cote labels individual Apple and Publisher Defendant executives as "noteworthy for their lack of credibility" — which I would paraphrase as meaning they're "liars lying under oath and they can't be believed."

-----------

Okay, finished. The last 30+ pages are devoted to anticipating every argument Apple can be expected to make on appeal and methodically rebutting or undercutting each of them. Judge Cote is a Clinton appointee who's senior status, so she has a lot of experience; and she's clearly learned how to write opinions in a way that make them particularly hard to reverse. The smartest and best federal district judges are usually the best advocates for why their own written decisions ought be upheld — they try to anticipate how the appeal is likely to proceed, and to make their decisions as nearly "bulletproof on appeal" as possible (which is to say, clear, well-reasoned, and correct). And this may be a candidate for the Second Circuit to "affirm on the basis of the district court's opinion" — basically the appellate court, instead of writing its own opinion, just saying, "Yeah, what she said." It's a very high compliment to a district judge when that happens in an important case.

Lots of zingers but this one I really like:

This whole fact pattern would never make a good exam question in an antitrust course in law school. It's way too easy. There's an arsenal of smoking guns. It's like no one at Apple ever heard of the Sherman Act.

[Elfwreck]

Originally Posted by leebase

The very fact the the publishers HATED Amazon's pricing but were POWERLESS to do anything about it is proof positive that Amazon had monopoly power.

The term is "monopsony," not "monopoly." (Single-outlet, rather than single-source.)

And publishers were not powerless. They could've left. They could've sold books to other places at a discount They could've supported other ebookstores, pushed for non-DRM ebooks to allow customers to switch from Kindle to Sony to Nook to Kobo and not care about what store they bought at.

They could start promoting themselves as a brand, teaching the public to associate certain kinds of books with certain publishers. Right now, genre readers are familiar with publishers but "mainstream/lit" readers often aren't--and that's because those publishers have always ignored readers; readers aren't their customers.

All publishers had to do to break Amazon was change their focus from "distributor = customer" to "reader = customer;" from that point, there were hundreds of ways they could shift their business practices to not be locked into Amazon.

It is apparent that the publishers did collude though I agree with Apple that Apple did not. The judge decided that Apple is guilty because Apple's actions allowed the publishers colluding to succeed.

Apple wanted its ibookstore; it coordinated the efforts and negotiations. The publishers didn't come to Apple and say, "so, give us this agency pricing deal;" Apple offered it, and helped them sort out how to force it on other retailers.

Apple, I expect, wanted the clickthrough accounting system more than anything else--they didn't want to have to sort out different books' wholesale-vs-retail pricing, didn't want to deal with bargains and how that changed the numbers. Wanted a simple percentage and no hassles--but knew that couldn't compete with other bookstores.

[fjtorres]

Originally Posted by K. Molen

That's apparently a quote from someone on Reddit. I have no idea how much or little they know about this sort of thing, but they certainly sound informed.

They aren't.
If they'd actually read the ruling they'd know the judge already dealt with the rule of reason argument. She covered all the bases, chapter and verse.

Guilty.

With treble damages and monitoring coming up next.
The money they can easily afford but shining a light in the dark places at Apple?
More cases are coming.

[leebase]

I find it amusing the folks who think it so hard for a customer to "not buy a book they think is too expensive" expect publishers to forgo millions of dollars in revenue from their number 1 and most important retailer and just "sell their books elsewhere if they don't like Amazon's pricing".

[K. Molen]

leebase, I'm curious... Are you saying you don't believe Apple broke the law, or that they did but that they were justified in doing so because of Amazon's behaviour?

I know you've said a lot in this thread, and I'm not asking you to repeat it all, I'm just not sure which of the above is your stance.

[Elfwreck]

Originally Posted by leebase

I find it amusing the folks who think it so hard for a customer to "not buy a book they think is too expensive" expect publishers to forgo millions of dollars in revenue from their number 1 and most important retailer and just "sell their books elsewhere if they don't like Amazon's pricing".

Or they could, of course, just let Amazon set whatever price it like for ebooks, just like it always has for pbooks, and publishers never complained that those sales were ruining the future of the publishing industry.

Publishers weren't losing money on the $9.99 bestsellers. Publishers had no evidence that those prices would eventually lead to loss of money... the public has no trouble grasping "early release sale; these prices go up when the books are no longer at the top of the charts."

Why is selling at a loss evil when it's ebooks but a reasonable marketing decision when a pbook is involved?

(I don't like Amazon. I think Amazon's business practices are predatory and deceptive and illegal in spots. However, I don't think they were breaking any laws with the $9.99 ebooks, and publishers were getting all twisted up over lack of control, not actual economic impact. And since neither the publishers nor Apple have shown any interest in the concerns of book readers, I'm not sympathetic to any of them.)

Publishing house options didn't stop at "they can pull their books from Amazon." They had plenty of other ways to undermine Amazon's control--offering discounts, "coupon for free or 1/2 price ebook with purchase of new pbook," setting up their own ebook store selling at a tiny markup over wholesale instead of retail. Or they could get creative. But they didn't want to get creative; they wanted to kill the ebook market, or limit it to an exotic high-tech luxury, and they based their decisions on that goal.

Over and over, they insisted on believing that every $10 ebook sale was a lost $25 hardcover sale, NOT a lost $7 paperback sale that would've waited six months or a year. Their lack of understanding of the market does not excuse collusion.

[leebase]

Originally Posted by K. Molen

leebase, I'm curious... Are you saying you don't believe Apple broke the law, or that they did but that they were justified in doing so because of Amazon's behaviour?

I think the PUBLISHERS apparently did collude. I do not think Apple did. Reading the judges pdf, it appeared to me that Apple is guilty for being the reason that the publishers colluding could succeed...and that Apple should have known/did know that the publishers were talking to each other.

Apple layed out very reasonable "it's in our best normal business interest" reasonings for their actions. Thus the worst interpretation of their actions need not have been the one the judge decided to believe.

MFN - it's not illegal, Apple didn't invent it. Apple did not have to worry about what the publishers would do once Apple was given MFN. For the judge to say that MFN meant Apple was forcing the publishers to make all retailers go Agency and is thus illegal would mean MFN clauses in any other case would also be illegal.

By NOT looking at the complete story -- not allowing ANY consideration of the position Amazon had put the publishers in, and thus accepting $9.99 as the "real price of ebooks", then the judge was exactly treating the "shooting of a burlar" as crime when it really isn't or shouldn't be.

[mrscoach]

leebase, the publishers were approached by Apple, who brokered the deals. Yes, Apple colluded. I don't understand how you can exonerate them, when they were the intermediary between the publishers and kept telling them "everybody else is doing it, join in. You know you want to. Just take the pretty blue pill and everything will be ok".

If someone knowingly aids in an illegal act (they know it is illegal)they are just as guilty as the others.

[Fat Abe]

Ignorance of the law is no excuse, and Apple should realize that there are higher laws and powers in the universe. Apple's actions smack of hubris, influenced by Steve Jobs and his remarkable lucky streak. The demigod got a smackdown.

[K. Molen]

Originally Posted by leebase

I think the PUBLISHERS apparently did collude. I do not think Apple did...

Alright. Thanks for clarifying that.

[SteveEisenberg]

Originally Posted by mrscoach

If someone knowingly aids in an illegal act (they know it is illegal)they are just as guilty as the others.

Who is this "they?"

Steve Jobs? He'd dead. Other executives have moved on. And what is going to happen to the people who are still there and conspired? Are they going to be -- horror! -- written up by their boss? Denied a Christmas bonus? Neither one. Instead they will be gently told by legal how the airlines, after getting a similar hand-slap many years ago, now manage to keep so many prices identical with winking and nodding rather than explicit statements.

Apple is a publicly held company. It's almost 3 percent of the S&P 500 stock basket that a large portion of middle income Americans have their pension invested in. Those average Americans won't be hurt much by this, but they will be hurt a tiny bit, which is also the degree of hurt the conspirators will face. My point in mentioning the pension plans is that the people hurt by this ruling, if anyone, are not likely to have had anything to do with the conspiracy.

Antitrust is even more absurd in publishing than with the airlines. The publishers have a legal life + 70 monopoly on each of their products. They can sell them, or withhold them, as they wish. And they can go to industry conventions and talk to other firms in the same line of business, so long as they vet everything they say first with their lawyers. Obtaining such legal advice is actually part of the slap-on-the-wrist publisher settlements. Yes, I am beyond cynical on this. It's a game nobody wins except a few lawyers.

[leebase]

Originally Posted by Fat Abe

Ignorance of the law is no excuse, and Apple should realize that there are higher laws and powers in the universe. Apple's actions smack of hubris, influenced by Steve Jobs and his remarkable lucky streak. The demigod got a smackdown.

I'm sure Apple has as much hubris as the next company, and more than most...sure. However, I see nothing wrong with them saying "look, we are interested in selling ebooks, but we are not interested in selling them as loss leaders". Amazon had made it so that nobody could make money selling ebooks. That's the effect of predatory pricing.

If someone is going into the book selling business...you are going to be talking to the top 6 publishers. That is not collusion in my book. Apple met with and negotiated separately with each company. They ALL had the same problem in Amazon. It did not take collusion to realize this.

Agency pricing is not illegal. MFN clauses are not illegal. With Agency pricing and the MFN -- and with Apple's power as a competitor -- it is a sure thing that the publishers would finally have the power to negotiate with Amazon. That's not collusion either.

What is collusion is the CEO's talking to each other and strategizing...which is what THEY did, not Apple.

Clearly, the judge and I disagree.

The judge's opinion is that the Apple executives were lying. She didn't catch them in a lie. No evidence was presented that showed the executives lying. It's just her opinion that they weren't believable. The judge and I disagree.

The publishers have no power to price their books beyond what people are willing to pay. There is a lot of competition in the book market. All the folks on this board who boycotting "the Agency 5" showed the truth behind the notion that no one has been coerced into paying more an ebook.

On the other hand -- Amazon selling the most popular ebooks below cost did indeed drive competition out of the market.

Ergo, the government chose the wrong target.

[Fbone]

Originally Posted by Elfwreck

Apple wanted its ibookstore; it coordinated the efforts and negotiations. The publishers didn't come to Apple and say, "so, give us this agency pricing deal;" Apple offered it, and helped them sort out how to force it on other retailers.

Apple, I expect, wanted the clickthrough accounting system more than anything else--they didn't want to have to sort out different books' wholesale-vs-retail pricing, didn't want to deal with bargains and how that changed the numbers. Wanted a simple percentage and no hassles--but knew that couldn't compete with other bookstores.

Actually, as revealed in Judge Cote's decision, Hachette and Harper Collins went to Apple first to try and establish Agency model. Apple intended to use the wholesale model for ebooks (similar to their other media products) but was then told about Amazon's pricing method. Apple opposed selling ebooks below cost.

As an aside, Hachette and HC previously tried to get B&N to go Agency.

[FizzyWater]

Originally Posted by Fbone

Actually, as revealed in Judge Cote's decision, Hachette and Harper Collins went to Apple first to try and establish Agency model. Apple intended to use the wholesale model for ebooks (similar to their other media products) but was then told about Amazon's pricing method. Apple opposed selling ebooks below cost.

As an aside, Hachette and HC previously tried to get B&N to go Agency.

Wasn't it stated in the original settlement documents, though, that arranging with a bookstore to go to agency wasn't the issue. It was the insistence that all the publishers had to do it at the same time and that they must also convert their existing contracts with other bookstores to the same, wasn't it, that was the conspiracy?

One of the disappointments to me (although I understand it's currently legal) was that all the publishers are welcome to return to agency pricing after the 2 year probation period is up. They just can't conspire to do it all at once.

[kennyc]

Originally Posted by SteveEisenberg

Who is this "they?"
...

http://www.sfgate.com/news/article/M...ey-2692203.php